Kenya-Uganda railways receives $164 mln capital boost
africa, kenya, money 8:49 AM
NAIROBI, (Reuters) - The operator of the Kenya-Uganda railway received a $164 million long term loan financing on Tuesday from six international financiers in a potential boost to hopes high transport costs and delays in the region might finally be tackled.
The investment, which is one of the largest in east Africa rail, is aimed at refurbishing the track, buying new wagons and locomotives and replacing information technology systems.
The six financiers in the project include International Finance Corporation (IFC), KfW of Germany and Equity Bank -- Kenya's biggest bank in customer terms, a statement from IFC said.
Rehabilitation of the rail network between Kenya and Uganda is viewed as critical to expanding trade across the east African region and is estimated it could reduce transport costs by up to a third.
"An efficient rail network has the capacity to reduce East African transport costs by as much as a third due to the operational and fuel efficiency of rail shipment," IFC in a press statement.
More than 90 percent of the cargo arriving in Kenya Mombasa port that is destined for Uganda, south Sudan, Rwanda and Burundi is transported by dilapidated roads, leading to delays.
Egypt based investment firm Citadel Capital, that has a 51 percent holding in the Kenya-Uganda rail operator Rift Valley Railways Ltd (RVR), said in February that it was to raise $287 million for a five-year upgrading project.
Karim Sadek, Citadel's managing director, said an additional $80 million will be raised from shareholders and the rest from internally generated funds.
Other shareholder in RVR include Kenyan based infrastructure investment company TransCentury with a 34 percent stake and Bomi Holdings of Uganda with 15 percent.
"This financing package is the backbone for an ambitious five-year rehabilitation program that will see Rift Valley Railways International make a quantum leap in operating standards," said Sadek in the statement.
The investment, which is one of the largest in east Africa rail, is aimed at refurbishing the track, buying new wagons and locomotives and replacing information technology systems.
The six financiers in the project include International Finance Corporation (IFC), KfW of Germany and Equity Bank -- Kenya's biggest bank in customer terms, a statement from IFC said.
Rehabilitation of the rail network between Kenya and Uganda is viewed as critical to expanding trade across the east African region and is estimated it could reduce transport costs by up to a third.
"An efficient rail network has the capacity to reduce East African transport costs by as much as a third due to the operational and fuel efficiency of rail shipment," IFC in a press statement.
More than 90 percent of the cargo arriving in Kenya Mombasa port that is destined for Uganda, south Sudan, Rwanda and Burundi is transported by dilapidated roads, leading to delays.
Egypt based investment firm Citadel Capital, that has a 51 percent holding in the Kenya-Uganda rail operator Rift Valley Railways Ltd (RVR), said in February that it was to raise $287 million for a five-year upgrading project.
Karim Sadek, Citadel's managing director, said an additional $80 million will be raised from shareholders and the rest from internally generated funds.
Other shareholder in RVR include Kenyan based infrastructure investment company TransCentury with a 34 percent stake and Bomi Holdings of Uganda with 15 percent.
"This financing package is the backbone for an ambitious five-year rehabilitation program that will see Rift Valley Railways International make a quantum leap in operating standards," said Sadek in the statement.
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